The Securities and Exchange Commission reported Tuesday that it handed out the first reward to a whistle-blower who helped federal securities regulators shut down an investment fraud. Under the SEC’s new whistle-blower reward program, the commission cannot disclose any information about the firm involved, including the information that the whistle-blower provided, but it did disclose that the case has led to more than $1 million in sanctions.
The new reward program was created as a part of the Dodd-Frank overhaul of the financial industry. The $50,000 payout—which is roughly 30 percent of the amount collected in the enforcement action—to the whistle-blower is the maximum reward under the new program. However, as the sanctions increase and more money is collected, the payout is expected to increase as well.
The SEC noted that in this particular case, the whistle-blower provided the exact information and cooperation that the new reward program was intended to create.
According to the SEC, there is a procedure they use to distinguish between helpful, high-quality tips, and those that are less helpful. In fact, there was a second person who came forward with information in this case. Unfortunately, that individual’s information fell into the less helpful pile, and that whistle-blower was denied any compensation.
Only a year into the program, the SEC claims that the program is steadily growing and they are seeing around eight tips per day.
For information on eligibility requirements, directions on how to submit a tip, instructions on how to apply for an award, and answers to frequently asked questions, you can visit the SEC Office of the Whistleblower website.
